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Ames National Corporation (ATLO): Does -4.1% EPS Decline Lately Make It An Underperformer?

Michael Canly

After reading Ames National Corporation’s (NASDAQ:ATLO) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Ames National’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Ames National

How Well Did ATLO Perform?

For the most up-to-date info, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to assess various companies in a uniform manner using the most relevant data points. Ames National’s most recent twelve-month earnings is $15M, which, relative to the prior year’s figure, has plunged by -3.78%. Since these figures may be fairly short-term, I have created an annualized five-year figure for ATLO’s earnings, which stands at $15M. This means that though earnings growth was negative from last year, over the longer term, Ames National’s profits have been increasing on average.

NasdaqCM:ATLO Income Statement Nov 28th 17

What’s enabled this growth? Let’s see if it is solely due to industry tailwinds, or if Ames National has experienced some company-specific growth. The rise in earnings seems to be propelled by a substantial top-line increase outpacing its growth rate of costs. Though this has caused a margin contraction, it has made Ames National more profitable. Viewing growth from a sector-level, the US banks industry has been growing its average earnings by double-digit 12.54% over the previous twelve months, and a less exciting 9.71% over the previous few years. This means that whatever uplift the industry is enjoying, Ames National has not been able to gain as much as its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies are profitable, but have capricious earnings, can have many factors influencing its business. I recommend you continue to research Ames National to get a better picture of the stock by looking at:

1. Financial Health: Is ATLO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

2. Valuation: What is ATLO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ATLO is currently mispriced by the market.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.